How hospital-based pathologists should approach Anthem rate cuts

March 10, 2020

After spending the better part of the past two years fighting Anthem Inc.’s pathology rate cuts in numerous states, pathologists are continuing to come together to discuss strategies for attempting to strengthen negotiating positions in hopes of restoring payment rates to a more palatable level.

However, while a number of different strategies have been employed, the results have been hit-or-miss at best, according to Ann Lambrix, Vice President of Client Services for Vachette Pathology.

After Anthem first signaled in the fall of 2018 that it intended to reduce pathology payments rates by at much as 80% in some markets, Lambrix said in subsequent months many groups opted to terminate their contracts with the intent of strengthening their negotiating leverage down the line. However, because of Anthem’s size and market saturation, that strategy hasn’t worked as effectively as it has with smaller payers.

“Anthem is coming back with better rates, but nowhere near what groups were getting paid prior to the cuts,” said Lambrix, noting that many hospital-based groups are barred from terminating their agreements with Anthem due to language in their hospital contracts.

Because Anthem represents such a large portion of most providers’ payer mixes, Lambrix pointed out that simply going out-of-network has presented more public relations challenges for both providers and their hospitals than providers typically expect to encounter when going out of network with a payer.

For one, patients are often upset after receiving a bill from an in-network facility, often resulting in angry calls to the hospital. To further complicate things, Anthem provides facility payments to patients directly when they see an out-of-network provider. While those payments are supposed to then be forwarded to the provider, educating patients on this process and actually receiving the money is a burdensome task.

“For other networks, because the payer mix is smaller, going out of network isn’t as much as an impact,” Lambrix said. “You open up the possibility to get paid more by going out of network with Anthem, but you really don’t gain much in the end. It’s a lot of time and energy spent chasing small dollars and fighting with your administration.”

And with surprise billing legislation now in effect in a number of states, to say nothing of the handful of proposals being currently discussed at the federal level, the ability to weather the PR storm and recoup lost dollars by billing patients directly as an out-of-network provider could soon be an option closed off to providers.

Lambrix said that despite the short-term financial advantages available to those who choose to go out of network to negotiate with Anthem, that strategy could backfire in the long run if Anthem attempts to narrow its network to a list of “preferred” providers, as UHC recently did. While Anthem has not explicitly said this is their strategy, providers should be cognizant of the fact that if they do leave in attempt to cultivate negotiating leverage, they may find they aren’t welcomed back by the payer later. And those who do stay may eventually see a payoff from doing so, although that’s hardly a guarantee, Lambrix said.

“At that point you’d be making money on the sheer volume of tests you receive if you’ve managed to survive to becoming a preferred provider,” she said. “Even though you’d be getting, maybe 60% of Medicare, you’d be getting all the business and wouldn’t have to compete for it.

In the interim, pathology providers should continue to organize at the local and state levels to push back against further potential reductions. While national advocacy groups like the College of American Pathologists and the American Society of Clinical Pathologists have had conversations with Anthem reps about this issue, there are also a number of grassroots advocacy efforts being launched in states like Ohio that would aim to protect pathology payments from additional cuts.

If you’d be interested in learning more about these efforts, or if you’d like to discuss contracting strategy for your lab, feel free to reach out to us directly at 517-486-4262.

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